Master Builders Australia has told a Senate inquiry into intergenerational housing inequity that stamp duty is quietly making clients' borrowing positions worse before a loan is even written, Australian Associated Press and Yahoo News reported.
When stamp duty gets rolled into a mortgage, it inflates the loan amount, affects LVR, and can push borderline clients into LMI territory.
In its submission to the inquiry, the association's chief economist Shane Garrett argued the levy compounds the challenge of entering the market at every step.
"Stamp duty drains the financial resources of those transitioning from renting to home ownership. Stamp duty bills erode the home purchase deposits of homebuyers, forcing them to take on mortgages that are both larger and heavier," the submission said.
First-home buyers in Sydney face a bill of approximately $39,700 on a typical purchase, while Melbourne attracts $57,500 (purchase prices unspecified in the submission) — costs that, when rolled into a mortgage, add years to the life of a loan.
The scale of the problem is already showing up in lending data. Research by Money.com.au found approximately half of Australian buyers are increasing their home loan to cover stamp duty and other upfront costs rather than paying from savings, with 18% borrowing extra to fund stamp duty alone. Money.com.au mortgage expert Debbie Hays said stamp duty without an exemption can feel like paying a second deposit.
Master Builders has called for stamp duty to be reduced across the board for first-home buyers, and for stamp duty surcharges on foreign buyers of new homes to be abolished. The association framed affordability as a supply problem as much as a tax one.
"Both renting and buying a home should be made more affordable so that a smaller portion of family income gets absorbed by housing costs," Garrett said. "This ultimately relies on delivering more new homes to both the owner-occupier and rental market."
The inquiry's scope extends beyond stamp duty. National Shelter has called for Commonwealth rent assistance to be increased and indexed — a reminder that for first-home buyer clients still renting, persistently high rents are eroding the deposits they are trying to save.
Brokers with Tasmanian clients face the most urgent deadline. Tasmania's stamp duty exemption for established homes under $750,000 ends on 30 June. Eligibility is determined by settlement date, not contract date — meaning buyers already under contract risk unexpected bills of more than $20,000. At the other end of the spectrum, from 1 July 2026 the ACT will abolish stamp duty for all first home buyers regardless of property value or income, making it the first jurisdiction in Australia to do so.
With stamp duty rules now diverging sharply across jurisdictions, brokers with first home buyer clients in multiple states should verify current thresholds before any application goes to a lender.
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